Life After Medicare HMO

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As the New Year quickly approaches, many seniors are being hit with the realization that in the next few weeks their health benefits will drastically change. The year 2000 marks the year with the greatest number of Health Plans withdrawing from Medicare coverage completely or in certain areas. This means that many seniors will have a much more limited choice of health plans, and in some areas no choice whatsoever. The major withdrawals are occurring in less populous, more rural areas for the most part. These areas are much more expensive for the health plans to do business in due to lower number of potential enrollees, fewer healthcare providers which adds up to less competition and negotiating room when contracting for care and higher overall administrative costs. As the majority of the health plans are for-profit companies, the fact that it is near to impossible to make a profit in these areas has spurred the withdrawals. Additionally health care cost continue to spiral upwards at a rate of 5-6% while the payment per patient from Medicare has only increased by an average of 2%. Additionally, health care payments for Managed Care Providers have increased faster than traditional Medicare in part because of the increase level of additional benefits they provide, that Medicare does not provide.

According to HCFA (Health Care Financing Administration) "Consistent with recent reports, in 2001, about 85 percent of current Medicare+Choice beneficiaries will be able to continue with their current Medicare HMO. Sixty-five Medicare+Choice HMOs chose not to renew their Medicare+Choice contracts and 53 reduced their service areas, affecting more than 934,000 Medicare beneficiaries. About 775,000 of the affected beneficiaries will be able to enroll in another Medicare HMO, if the HMO is accepting enrollees. About 17 percent or 159,000 of the remaining beneficiaries will be left with no Medicare+Choice HMO options, although some may choose to enroll in a private fee-for-service plan if one is available in their community. All beneficiaries who are affected by these nonrenewals may return to original fee-for-service Medicare."

What does this mean for those Medicare Beneficiaries that are affected by these withdrawals? It means change, which is always stressful and for many increased out of pocket costs for health care. Here is a rundown of some of these changes, what effect they will have, and what options those affected have.